Stay The Course

Client Talking Points

Follow Through

It’s important to stay the course once you’ve put a plan into action. Do you think Lord Nelson turned his ships around when difficulty stared him in the eye? Absolutely not. Our three Q1 2013 Macro Themes are #GrowthStabilizing, #HousingsHammer and #QuadrillYen. Japan is getting their currency devalued in favor of the Nikkei hitting astronomical levels on the upside, the housing market continues to put up solid data week after week showcasing the recovery, and growth is still stabilizing. With regards to the latter, a lot can change very quickly if crude oil is $130 a barrel and if the debt ceiling debate in late February can’t get sorted out appropriately. For now, we’ll stay the course and will continue to trade the risk and the range we’re comfortable with, whatever the stock.

Asset Allocation

CASH 52% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 18%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

“@Hedgeye Cake at the office today? We wouldn't want to forget Big Alberta @HedgeyeDJ's birthday now would we#HappyBirthdayBigGuy #ToGrowth” -@BrennanDTurner

QUOTE OF THE DAY

“The only way to make a man trustworthy is to trust him.” -Henry Stimson

STAT OF THE DAY

Procter & Gamble (PG) fiscal-second-quarter earnings more than doubled to $4.06 billion or $1.39 a share.